OJK’s New Regulation on Licensing and Organization of Venture Capital Companies
Indonesia's Financial Services Authority Otoritas Jasa Keuangan (OJK) has issued a new regulation with regards to Venture Capital Companies No. 34/POJK.05/2015 (POJK 34). This regulation has come into force on the 28th December 2015.
The revisions made are principally based in three key changes, from the establishment of venture capital companies, the merger, consolidation, and acquisition of venture capital companies, to the licensing and organization of the venture capital companies itself. OJK also puts forth their consideration of Islamic Law and included sharia law and sharia-based legal entities in their provisions.
There are few legal assessments by national prominent lawfirms such as the review on the re-regulation by AKSET and specific changes by Melli Darsa & Co. Most assessed the limitations of foreign ownership in shareholding to a maximum of 85%, including all existing venture capital companies that changed its capital structure, shareholding composition, and/or their shareholders.
This applies to cooperatives and limited partnerships, such as limited company and others equivalent to it. In order to commence operations, the said venture capital company is obliged to apply for a business license from OJK, which need thirty working days before the issuance of the license.
To establish a venture capital fund, in the other hand, investors or future shareholders have to provide minimum paid-up capital of Rp 50 billion for a limited company (Perseroan Terbatas or PT) and Rp 25 billion for a cooperative or a limited partnership (CV). Meanwhile, those inquiring a sharia-based venture capital fund needs to build up a total of Rp 20 billion for PT and Rp 10 billion for cooperative or CV.
This regulation was released as a reaction to the crowdfunding business trend happening the year round. "A venture capital company is a form of up-to-date and progressive financing firm that will adapt to the creative and innovative needs of small businesses and start-ups in the country," the OJK deputy commissioner for non-banking supervision, Dumoly F. Pardede, said via the Jakarta Post.
OJK has been releasing regulations in order to improve the nation's economic sector. OJK is currently tailoring a new regulation that is planned to improve efficiency in the banking sector, as mentioned in Lippo's Jakarta Globe, and that is by encouraging Indonesian lenders to reduce their net interest margin (NIM).
Between some countries in Southeast Asia, like Singapore and Malaysia, Indonesian banks are known to have higher NIM rates on average.